RBI imposes Penalty on 5 Co-operative Banks

The Reserve Bank of India (RBI) has imposed Penalty on 5 Co-operative Banks: Beed District Central Co-operative Bank Ltd. Maharashtra, Panchsheel Mercantile Co-operative Bank Ltd. Surat Gujarat, The Sultan’s Battery Co-operative Urban Bank Limited Wayanad Kerala, Nilambur Co-operative Urban Bank Limited Kerala, Kamaraj Co-operative Town Bank Ltd. Tamil Nadu.

RBI imposes monetary penalty on Beed District Central Co-operative Bank Ltd., Maharashtra

The Reserve Bank of India (RBl) has imposed, by an order dated September 25, 2025, a monetary penalty of ₹2.25 lakh (Rupees Two Lakh Twenty Five Thousand only) on Beed District Central Co-operative Bank Ltd., Maharashtra (the bank) for contravention of provisions of Section 26A read with Section 56 of the Banking Regulation Act, 1949 (BR Act) and non-compliance with certain directions issued by RBI on ‘Membership of Credit Information Companies (CICs) by Co-operative Banks’ and ‘Know Your Customer (KYC)’.

The bank had:

1. failed to transfer eligible unclaimed amounts to the Depositor Education and Awareness Fund within the prescribed time;
2. failed to submit credit information of its customers to all the four CICs; and
3. failed to undertake requisite Customer Due Diligence (CDD) procedure while establishing account-based relationship in certain accounts.

RBI imposes monetary penalty on The Panchsheel Mercantile Co-operative Bank Ltd., Surat, Gujarat

The Reserve Bank of India (RBl) has, by an order dated September 25, 2025, imposed a monetary penalty of ₹1 lakh (Rupees One Lakh only) on The Panchsheel Mercantile Co-operative Bank Limited, Dist. Surat, Gujarat (the bank) for non-compliance with certain directions issued by RBI on ‘Customer Protection – Limiting Liability of Customers of Co-operative Banks in Unauthorised Electronic Banking Transactions’.

The bank had failed to enable its customers to instantly respond by “Reply” to the SMS alerts to notify the objection towards unauthorised electronic banking transactions, if any.

RBI imposes monetary penalty on The Sultan’s Battery Co-operative Urban Bank Limited, Wayanad, Kerala

The Reserve Bank of India (RBI) has, by an order dated September 25, 2025, imposed a monetary penalty of ₹1 lakh (Rupees One Lakh only) on The Sultan’s Battery Co-operative Urban Bank Limited, Wayanad, Kerala (the bank) for non-compliance with certain directions issued by RBI on ‘Loans and advances to directors, their relatives, and firms /concerns in which they are interested’.

The bank had sanctioned director related loans.

RBI imposes monetary penalty on The Nilambur Co-operative Urban Bank Limited, Kerala

The Reserve Bank of India (RBI) has, by an order dated September 25, 2025, imposed a monetary penalty of ₹50,000/- (Rupees Fifty Thousand only) on The Nilambur Co-operative Urban Bank Limited, Kerala (the bank) for non-compliance with certain directions issued by RBI on ‘Co-operative Banks – Interest Rate on Deposits’.

The bank had offered higher interest rates on Non-Resident (External) rupee deposits than those of corresponding domestic term deposits.

RBI imposes monetary penalty on Kamaraj Co-operative Town Bank Ltd., Tamil Nadu

The Reserve Bank of India (RBI) has, by an order dated September 25, 2025, imposed a monetary penalty of ₹1 lakh (Rupees One Lakh only) on Kamaraj Co-operative Town Bank Ltd., Tamil Nadu (the bank) for non-compliance with specific directions issued by RBI under ‘Supervisory Action Framework (SAF)’.

In non-adherence to directions issued under SAF, the bank had:

1. not reduced single borrower exposure limit, for fresh loans and advances, by 50% of the applicable regulatory limit;
2. sanctioned and disbursed fresh loans and advances not backed by collateral security of term deposits / NSCs / KVPs / insurance policies;
3. expanded the size of balance sheet; and
4. expanded the size of deposits.